European stocks closed virtually unchanged on Wednesday, as investors took a cautious stance amid fears of a potential U.S. recession.
The pan-European Stoxx 600 provisionally closed 0.02 percent higher, with sectors mixed and most major bourses lower.
Market players are taking a cautious approach as worries of a slowdown in economic growth linger. U.S. bond markets have in recent days signaled a U.S. recession may be coming, with the U.S. 10-year Treasury yield falling below that of the 3-month bill for the first time since 2007 last week.
Commerzbank surged toward the top of the index during afternoon deals, after the German lender's annual earnings report showed net profit increased to 865 million euros from 128 million a year earlier. The report also revealed that the bank's CEO took a 32 percent pay cut last year, in direct contrast with potential partner Deutsche Bank, which increased its top executives' pay in 2018. Shares of Commerzbank were around 5.2 percent higher on Wednesday.
Bank stocks in Europe also rose on a hint from ECB President Mario Draghi that it may soon cost less to park cash at the central bank.
Meanwhile, Norsk Hydro shares also saw gains after the firm said it had agreed with Brazil's federal prosecutor to an assessment that could help it resume full production at its half-shut Alunorte refinery. Shares of the aluminum and renewable energy firm gained 3.06 percent.
Swedbank tumbled to the bottom of the index after Swedish authorities searched the bank's head office as part of an investigation into money laundering. SVT, a Swedish broadcaster, also reported Thursday that Swedbank was facing a separate investigation by the New York Department of Financial Services for misleading investigators looking into a global money laundering scandal. Shares of Swedbank lost more than 11.91 percent on Wednesday.
Meanwhile, European Central Bank President Mario Draghi delivered a speech on the health of the European economy and monetary policy. The central banker, who is nearing the end of his leadership, said that a temporary slowdown in growth does not necessarily mean a recession is coming.
Elsewhere, Brexit uncertainty continues to weigh on sentiment. U.K. Prime Minister Theresa May is set to address lawmakers of her own Conservative Party Wednesday, with reports saying she could lay out her own exit date in return for support for her twice-rejected EU withdrawal deal in Parliament.
British lawmakers are due to hold a round of so-called indicative votes — essentially votes on what the course of Brexit should look like — later in the day. This comes after parliamentarians took control of the Brexit process from May's government.
In dealmaking news, German pharmaceutical company Merck KGaA made a hostile $5.9 billion takeover bid for chemicals firm Versum Materials Tuesday, bypassing management and offering to buy out shares directly from investors.